krispy natural

Launching Krispy Natural:

Cracking The Product Management Code

http://www.bvv.cz/salima/aktuality/crispy-natural-zdrava-svacinka-z-polska/

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2

Candler Enterpris

es($ 18

Billion)

Beverage Division

A Quick service

restaurant

division

Pet care division

Pemberton

(snack food

division)

http://www.pri.org/stories/2014-12-24/baking-great-cookies-not-just-art-its-sciencehttp://www.todayifoundout.com/index.php/2010/10/why-crackers-have-holes/

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Pemberton’s income as a percent of sales for 2011 was:

Category % of salesCOGS (cost of goods and services) 78.8%Brand Advertising and Marketing 7.7%

Taxes 5.8%Profit after tax 7.7%

TOTAL 100%

Pemberton:

4Pemberton:

Three key strategic priorities for the company:

1) Building a collection of attractive, durable brands.

2) Leveraging leading marketing, sales and DSD (direct store delivery) systems to increase revenue and profits.

3) Building and acquiring capabilities in salty snack categories.

http://www.thinkmulti.com/get-ahead-target-marketing/

5The U.S. Cracker Industry

Mintel study in United States reported that:

1) 74% respondents consumed crackers on a regular basis.

2) 34% ate them as part of regular weekly diet.

3) 53% respondents considered overall healthfulness an important factor.


2009 share 2010 shareKraft 37.8% 37.0%Kellogg 28.9% 28.1%Pepperidge Farm (Goldfish) 13.9% 14.2%Private Label 4.6% 4.8%Other 14.8% 16.0%

“All Other” Crackers:The broad all other cracker segment experienced a 2.1% CAGR for period from 2008 to 2010.

Manufacturers sales of “All Other” Crackers.


2009 share 2010 shareKraft 34.7% 32.7%lance 31.5% 29.9%Kellogg 15.5% 21.0%Private Label 8.0% 8.2%Other 10.2% 8.1%

Crackers with fillings:After flat sales from 2005 through 2009, the crackers with fillings segment experienced strongest growth of approximately 14% in 2010.

Manufacturers sales of Crackers with filling market share.

8Krispy LineIn 2008, Pemberton took first step to enter the salty snack market with the acquisition of Krispy Inc., Krispy products were marketed as mobile, “ Grab and Go” snacks with a strong presence in vending machines and convenience stores.

Plan 2009 Actual % to planKrispy Retail $97.5 $50.8 52.1%Krispy Vend $23.4 $18.0 76.9%

Total Krispy Single-Serve

$120.9 $68.8 56.9%

2009 Krispy single-serve sales performance vs plan.

9Krispy RelaunchMarketing Strategy

After a huge Failure, Company analyzed the causes of it, and plan accordingly for the relaunch.

1) Pemberton R&D labs were engaged to improve the product taste and quality.

2) Rebranding as Krispy Natural, to attract health conscious customers.

3) Extending product line beyond single serve and introducing more flavors.

http://www.anything4restaurants.com/products/sunshine-krispy-original-saltines-500-ct-207676.html

10Krispy RelaunchAfter a lot of R&D products were sent to Taste tests. The test result showed 77%-92% positive purchase intent for new Krispy Natural Flavors.

Now, Krispy naturals expected a minimum sales of $500 million during year one of national distribution and a steady-state pre-tax profit contribution of at least 13%

http://www.anything4restaurants.com/products/sunshine-krispy-original-saltines-500-ct-207676.html

($ in millions) Year 1 Year 2 Year 3Dollar Sales $500 $580 $700 Growth 16% 21%Dollar Share 9% 10% 11%

Brand Projections

11Krispy Relaunch

Krispy’s Focus:

1) More flavors

2) 100% whole wheat

3) Natural ingredients

4) Pricing

http://www.builtlean.com/2013/07/16/whole-grains-healthy/

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Krispy Inc. Didn’t target health conscious

customers

Regional brand

Single serve cracker packages

Not a lot of flavor options

Krispy Natural Targeting health conscious

customers

Trying to go national

Multi serving cracker packages

More flavor options, focused on taste.

Krispy RelaunchAs Krispy Naturals

13Test Market Plan

Source : HBR

14Test Market Plan ResultsKrispy Natural was officially launched in two market regions1) Columbus (here Krispy brand has no prior presence)2) South eastern united states (where brand Krispy has prior presence)

Region Prior-test share

Expectations

Actual

Columbus 0% 9% 18%South-east 9% 15% 10%

https://en.wikipedia.org/wiki/Southeastern_United_Stateshttp://www.istockphoto.com/in/photo/columbus-map-ohio-usa-gm185012203-18987292

15Test Market Plan Results

16Strengths

1) World renowned product development labs which it uses for product development and R&D

2) Culture of innovation

3) DSD used for deliveries.

4) Premium Pricing Startegy

http://www.thirdeyeassociates.co.in/why-us/

17Weaknesses/ threats

1) Capacity Constraints for DSD for Krispy Natural products

2) Most of profit goes on heavy marketing and advertising

3) Fritto-Lay Entering Cracker market

4) Major struggle in southeast to increase sales

http://jurinnov.com/the-threat-of-rogue-certificate-authorities/

18Competitors

Partial Competitive Analysis.

Source : HBR

19Sales And Channel ResponseMidwest division sales manager Wanda Fitzgerald explained “We have great relationships with the trade:

1) Our DSD reps are in the stores every week and the store managers respect our knowledge of the business.

2) The large chain headquarter buyers were particularly impressed with the consumer research results and inventory turn estimates for Krispy Natural.

3) The pull marketing really created a buzz and customers were coming to the stores asking for Krispy Natural by name.

4) They also loved all the promotional activity and consumer advertising.

20RECAP

Pemberton (snack food division)

US Cracker industry(Mintel study etc.)

Krispy Plans for new launch

Krispy Relaunch as Krispy Natural

Test Market Plan and Results

Strength, weakness, threats, sales etc

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Prof. Sameer Mathur

IIM Lucknow

Divyanshu Goyal

IIT Jodhpur

DISCLAIMERThis presentation is created by Divyanshu Goyal, IIT Jodhpur, during a Marketing Internship under Prof. Sameer Mathur, IIM Lucknow